People who have been considering investments in dealer gold as a way to wait out any upcoming economic difficulties may have gotten further motivation this week when Fitch Ratings downgraded Greece's credit rating.
Greece has been alarming investors for weeks amid speculation that it will be unable to cover its future debt obligations, largely because of a budget deficit that is far above the level deemed permissible by European Union standards.
There has been growing speculation that the country will require a financial bailout package from either the EU or the International Monetary Fund if it is to get its fiscal situation back under control.
Further complicating the matter has been the unrest among some workers in Greece that proposed budget cutbacks have led to. There have also been reports in recent days of wealthy Greeks withdrawing their deposits from the country's banks, which could make it even harder to get back to fiscal health.
In the latest development on this situation, Fitch Ratings indicated Friday that it had downgraded Greece's long-term default ratings to BBB- from BBB+ with a negative outlook.
"The downgrade reflects the intensification of fiscal challenges in response to more adverse prospects for economic growth and increased interest costs. It also reflects ongoing uncertainties about the government's financing strategy in the context of increased capital market volatility," explained Fitch, adding that the country also faces a "sharp rise in interest rates" as well as a weaker outlook for economic growth.
The credit rating company acknowledged that there were also "some early indications of improvements in fiscal outturns and the strength of the government's commitment to fiscal consolidation measures."
For Greece, one of the biggest financial problems in the coming months could be an elevated cost of borrowing brought on by the rating downgrade and other factors.
Looking ahead though, Greece may be just one of a number of nations around the world with ticking debt time bombs. Spain and Portugal are widely cited for their own possible deficit woes, while even the United States has not been immune to speculation that it could end up struggling to meet debt obligations in the coming years.
For investors who are wary of these disturbing financial prospects, one option could be to consult with silver and gold dealers about the stability that investing in precious metals can offer in the current fiscal climate.
